Country fiche for Estonia

General information

Estonia is a European frontrunner! Crowdfunding started in 2009 with a local P2P consumer lending platform called isePankur (now Bondora). In 2015, Estonia ranked second in Europe in total volume per capital. Although the Estonian market has only 1M+ people, it has the potential to grow by virtual Estonians – attracted by the e-residency programme that was recently launched by the Estonian government.

AF market volume per capita

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Role of alternative finance

Overall size of the market:

Estonia is ranked in the top 10 European countries by alternative finance market volume, with an overall volume equal to 31.5 million euros. Lending crowdfunding is the most common model in the country. Furthermore, Estonia has an impressive high volume of alternative finance per capita compared to the not elevated GDP per capita. Finally Estonia ranked first for alternative finance volume per capita with €24 (excluding UK).

Estonia has numerous platforms, many of which operate cross border.
- Bondora.com is aiming to become a pan-European lending platform. Bondora secured a peer-to-peer lending license in the UK and is now under the supervision of the UK Financial Conduct Authority.
- Hooandja.ee is the “kickstarter” of Estonia. It was launched in 2012 and has over 43,000 regular contributors and its user base is from 180 countries.
- Investly.co, the first business P2P lending and invoice factoring platform in Estonia (launched also 2014), has opened their shop in London this year.
- The first equity based platform Fundwise.me launched in 2015.

Regulatory Context

Evidence

Is there a specific national regulation in place applying to crowdfunding?

No

General regulation

- If the Crowdfunding platform facilitates the offering of transferrable securities, or its operator acts as a securities broker, the platform may be deemed to provide investment services in the meaning of SMA and will be subject to the investment firm license requirement.
- Under the Creditors and Credit Intermediaries Act, lending based platforms, depending on the structure and activity of the platform, are obliged to hold a license from 21st March 2016.

Support policies

There’ll be some kind of regulation soon and hopefully the amount that is allowed to be raised publicly now (€100,0000) will be raised to €1 million at least.

Main policy institution responsible in the country (ministry in charge of alternative finance):

Rahandusministeerium - Ministry of Finance

Evidence

Matching funds initiatives

State-aid

Tax benefits

Crowdfunding guidelines for entrepreneurs / investors

Guidelines for researchers on crowdfunding for R&I

Additional insight

Success story of crowdfunding platfroms for R&I:

NAME: Fundwise
DESCRIPTION: Fundwise is an equity-based crowdfunding platform. It offers an easy way to register, supported by the legislation that allows you to register an online business within one day.
LINK: https://fundwise.me/en

Success story of crowdfunding projects for R&I:

PROJECT NAME: Overstep
PLATFORM: Fundwise.me
DESCRIPTION: Overstep is a First Person Shooter videogame developed by Gamecan, a small Estonian software house. The project aims to become a wide success due to the quality of the team involved and the low cost of Estonian professionals, compared to American or French developers. The project reached the amount required thanks to the contracts signed by Gamecan with Microsoft. The agreements will guarantee a large-scale distribution through Steam and a software and hardware support. AMOUNT RAISED: € 60,840 out of € 22,320-70,200.
LINK: https://fundwise.me/en/pitch/overstep

Best Practice 2 - The Estonian government has launched an e-Residency programme to boost the country's digital economy and market with new customers. In this perspective, it is now partnering with Fundwise - the 1st equity crowdfunding platform in Estonia and the Baltic states. https://fundwise.me/en/e-residency

Policy measures:

The Estonian e-residency will take crowdfunding global and by summer 2016, it’ll be even easier when local banks will allow e-residents to open bank accounts and securities accounts via video links.

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